The hedge fund trying to take over a Quad Cities newspaper publishing company has filed a lawsuit after Lee Enterprises rejected its takeover bid.
In the suit, filed Wednesday in Delaware, an affiliate of Alden Global Capital argues that Lee was wrong to deny the nomination of three Alden nominees to the company’s board of directors.
The lawsuit, filed by Strategic Investment Opportunities, an affiliate of Alden, argues the Lee board infringed on company rules when it denied the board nominee request.
The Alden affiliate is asking a court to order the board nominees stand for election at Lee’s 2022 annual meeting. Also, it wants the court to rule part of Lee’s bylaws concerning nominations to the board as “unenforceable.”
A statement released today from the Davenport-based Lee Enterprises called the lawsuit “baseless.”
“As we explained in detail on Dec. 3, Alden’s director nomination notice was clearly invalid and we remain committed to acting in the best interests of all shareholders. Alden’s claims are baseless,” a Lee spokesman said in a news release.
Alden officials did not respond for a request for comment from the Quad Cities Regional Business Journal.
Last week, the Lee Enterprises Board of Directors unanimously voted to reject Alden’s unsolicited, non-binding offer. In a statement released Dec. 9, the board determined that Alden’s $24-a-share offer “grossly undervalues” the newspaper publisher and is not in the best interest of the company and its shareholders.
Alden stated in this week’s lawsuit that it intended for the $24-a-share offer to be preliminary, and it could have been changed if Lee took part in constructive talks. In the suit, Alden also stated it plans to send Lee shareholders information about its director nominees before the company’s 2022 annual meeting.
Lee’s stock was at $36.96 a share as of mid-morning Thursday.
On Nov. 22, Alden made an unsolicited bid to take control of Lee for $24 per share in cash.
The newspaper chain later announced that it may launch a “poison pill” plan that has the goal of making it more difficult and more costly for Alden to get controlling stake of the company. The plan would allow its other shareholders to buy shares at a 50% discount or possibly get free shares for every share they already own. The plan would take effect if Alden gets control of at least 10% of Lee’s stock.
Lee Enterprises owns 77 daily newspapers across the nation, including the Quad-City Times, Dispatch/Argus and Muscatine Journal in the Quad Cities region.
